The False Claims Act

A Venerable Set of Regulations

We’re willing to bet that you don’t realize how old and respected a tradition whistleblowing is in the U.S. It’s not a product of modern times. In fact, the False Claims Act, or, rather, its legislative roots, go all the way back to the Civil War—153 years, to be exact, as of 2016.

In fact, if you look back another 545 years, the origins of whistleblowing law end up in 1318 England. Qui tam suits (ones in which a person sues the wrongdoer on behalf of the king or government) appear to have originated in the Western world with King Edward II. Under Edward, when a relator (whistleblower) successfully sued government officials who were working on the side as wine sellers, the king offered him one-third of the total collected financial penalty.

In 1773, he exposed confidential letters that proved Thomas Hutchinson, the governor of Massachusetts, had misled Britain’s Parliament in order to champion an increased military presence in the colonies. We can only speculate as to the reasons Hutchinson did what he did, but the end result for him was dishonor and exile. As far as we know, it is the first recorded instance of whistleblowing in our country.

Today’s Law Began with President Lincoln

The original False Claims Act, also known as The Lincoln Law, was enacted in 1863 to fight fraud against the federal government and Union troops during the Civil War. The qui tam aspects were likely the biggest reason for the law’s success. This early version of the law assigned relators 50 percent of what was recovered, and allowed double damages.

In 1943, in response to supposed abuses, Congress essentially killed the qui tam provisions of the FCA. The changes meant a sizeable cut in the rewards for relators, and a prohibition on bringing qui tam suits that were founded on evidence the government already possessed. While the U.S. Attorney General could still pursue such cases, qui tam actions pretty much disappeared.

Reagan-Era Changes to the FCA

Amendments to the FCA in 1986 revived the qui tam provisions of the law. These amendments arose from public disgust over widespread fraud in various defense contracts. It was the era of the $640 toilet seat, and the public was, justifiably, outraged.

Sponsors of the 1986 FCA amendments were Senator Charles Grassley (R-Iowa) and Representative Howard Berman (D-California). The amendments accomplished the following:

• Eliminated the government knowledge defense, meaning that qui tam suits could again be brought even if the government already possessed the information.
• Lowered the standard of proof required, but added liability provisions for defendants who acted with “reckless disregard” for the truth.
• Increased the damages and penalties that could be recovered. The statute affecting penalties was changed so that those committing fraud could be charged a minimum of $5,000 and a maximum of $10,000 for each violation. In addition, treble (triple) damages could be assessed.
• Increased the amount relators could receive to between 15 and 30 percent of whatever the government recovered and provided for payment of relators’ attorney fees at the court’s discretion.
• Provided protection for whistleblowers against retaliation.
• Lengthened the statutes of limitations to as much as ten years.

As you might imagine, this led to a renewed surge of qui tam suits brought under the FCA.

Recent Changes to the FCA

Amendments were made once again to the FCA in 2009, as part of the Fraud Enforcement and Recovery Act (FERA), passed in the wake of the 2008 financial crisis that temporarily sent the entire world to its knees. The 2009 amendments took care of the following:

• Corrected aspects of the 1986 amendments that led to judicial misinterpretations of the intended reach of those amendments, expanding substantive liability provisions to cover situations not previously covered.
• Allowed the government to enlarge the use of civil discovery devices and to make civil investigative demands in order to uncover relevant facts. Doing so serves as a preliminary action to the government’s deciding whether to intervene in a qui tam suit or to initiate their own suit under the FCA.
• Updated the FCA with regard to changes that had occurred since 1986 in how the government conducts its business.

Finally, in 2010, additional amendments were added as part of the Patient Protection and Affordable Care Act (PPACA). These amendments make it easier for whistleblowers to sue in qui tam cases by enlarging the definition of the concept of what an original source is and by limiting the definition of what constitutes public disclosures. These changes allowed more cases to be brought.

The 2010 amendments apply to all FCA cases, not just those relating to health care or health insurance. However, unlike with FERA, the amendments’ provisions are not retroactive (do not apply to any cases that were pending at the time the amendments were enacted).

The False Claims Act in our country has a long and illustrious history, as do the whistleblowers it assists and protects. Fighting fraud against the government benefits all of us.

Hands-on help. Exceptional results.

If you have knowledge concerning fraud against the government, an experienced whistleblower attorney  like the ones at the Louthian Law Firm can assess your case and help you file the necessary disclosure statement. In some instances, the government will intervene (take part in your lawsuit).

One of the most important reasons to contact a qualified whistleblower attorney is that you are much more likely to meet with success if your claim is clear, concise and substantive. The Louthian Law Firm can help you structure your claim in such a way that the government will be more likely to intervene in your case, possibly increasing the chances that you will recover reward money. Even if the government doesn’t decide to intervene, it might still be advisable to pursue your case without government involvement, with our strong support through every step of the process.

For a free, confidential evaluation of your case, call the Louthian Law Firm today at 803-592-6231 or fill out the online contact form.